The 2017-18 ‘Budget of Choices’ was announced on 9th May 2017. Below we list a number of the proposed measures that may directly impact you and your business:
Medicare Levy to increase
To help fund the $22 billion National Disability Insurance Scheme, the Medicare levy will increase from 2% to 2.5% from 1st July 2019.
Salary sacrifice home deposits
From 1st July 2017, first home buyers will be able to salary sacrifice up to $30,000 from their pre-tax income into their superannuation account where withdrawals used to purchase a property will be taxed at a reduced rate.
No travel expenses for residential property investors
In the 2018 financial year residential property investors will no longer be able to claim a deduction for travel expenses made inspecting or maintaining the property or for rent collection.
Further from 9th May 2017, plant and equipment depreciation cannot be deducted on assets that were purchased by a previous owner. Investors who purchase plant and equipment assets for their residential property will be able to depreciate the cost over the effective life of the asset, however subsequent owners will be unable to claim any remaining depreciation. Existing investments will be grandfathered.
Foreign investors lose capital gains exemption
From 9th May 2017, the capital gains exemption will no longer be available for foreign and temporary tax residents (existing investments will be grandfathered until 30th June 2019).
In addition the capital gains tax (CGT) withholding rate for foreigners will be increased to 12.5% and the withholding threshold will be reduced from $2 million to $750,000.
As well as increasing university fees, the government is looking to reduce the income level at which an individual needs to start repaying their HECS debt from July 2018. Instead of repaying your debt when you’re earning over $55,000, from next year you will have to start paying when you earn over $42,000.
The over-65s will be able to contribution up to $300,000 of the proceeds from selling their home into their super fund. Fortunately the asset work test will not apply to the contribution and both members of a couple can take advantage of this for the same home.
Older Australians will also receive a one-off $75 power rebate and those that lost their pensioner concession card as a result of the asset test change earlier this year will have the benefit restored.
Immediate deduction for $20,000 assets continuing
Back in May 2015 the government announced that small businesses could claim an immediate deduction for any assets that cost less than $20,000. This measure will continue until 30th June 2018 with the possibility to be extended again.
Child Care Subsidy replaces CCB & CCR
From 2nd July 2018, the childcare subsidy will replace the Child Care Benefit and the Child Care Rebate. The new subsidy will be means-tested based on the family income and will pay between 50 and 85% of child care fees up to an hourly cap. This cap will be determined by the amount or work, study, training or other recognised activity undertaken.
Families earning over $350,000 will not be eligible for the subsidy and for families earning over $185,000, an annual cap of $10,000 per child will be applied.
The Big 5 Levy
The big banks will be subject to a levy on liabilities of $100 million or more from 1st July 2017. Despite the Treasurer advising the contrary, economists are warning that the effect of this levy may impact customers in the form of lending rates. Additionally any reduction in their profits will ultimately impact their shareholders.